Jobs are priority, Obama advisers say

WASHINGTON - President Obama's chief economic advisers said yesterday that putting Americans back to work was the first order of business in working the country out of the deepest economic downturn in six decades, and only then can the administration start tackling the soaring federal debt.

At the same time, Christina Romer, chairwoman of the White House Council of Economic Advisers, said she would not consider the recession truly at an end until employment returns to levels last seen at the end of 2007, when the recession began.

Her view was technically at odds with that of Lawrence Summers, director of the White House National Economic Council, who said third-quarter growth of the gross domestic product - the measure of economic activity - marked a statistical end to the recession.

But the pair did agree with forecasts that the economy would begin producing more jobs in the spring, a trend that could lower the nation's jobless rate from 10 percent.

"I believe that, as do most professional forecasters, that by spring, employment growth will start to be turning positive," Summers said.

Romer agreed, but she cautioned that the upward trend could be hit by poor showings in some months as those who had given up looking for work reenter the labor market.

"I would anticipate some bumps in the road as we go ahead," Romer said.

The administration took heart when the November jobs report showed only 11,000 people joined the unemployment rolls. That figure had been as high as 700,000 in January, when Obama took office.

To keep pace with new job seekers entering the workforce for the first time, the economy needs to create 100,000 jobs a month.

"The whole key is not just growing again, you've got to grow robustly, that's how you get a lot of job creation, that's how you get a lot of progress on the unemployment rate," Romer said.

The unemployment rate in November dropped to 10 percent from 10.2 percent in October, when it reached the highest in 26 years.

The administration's focus on creating jobs first and worrying about the deficit second shows itself in the president's call for using $200 billion that unexpectedly is available from the $700 billion bank bailout fund to further stimulate the economy.

He wants to create jobs through spending to improve the nation's infrastructure, lending to small businesses, and financial incentives for Americans to make their homes more energy-efficient.

"What I'm interested in is a targeted jobs package that can help to boost what's already taking place. Companies are already starting to hire again. Is there a way to boost their confidence - and I think there is," Obama told CBS's 60 Minutes in an interview airing last night.

"We are in a very special kind of economic situation, and frankly, jobs have to be the top priority, and every bill is going to be a jobs bill going forward," Summers said.

Even as Obama was looking to dip into the Troubled Asset Relief Program, the Bush administration fund created to avert a banking collapse, he also was set to meet today with financial-sector executives to push them to increase lending to small business and consumers.

Summers also listed the need for the big banks to:

Stop trying to kill legislation to regulate the industry;

Moderate bonus payments, realizing the institutions were saved with taxpayer money;

Boost efforts to prevent home-mortgage foreclosures.

Summers appeared on ABC's This Week and CNN's State of the Union, while Romer was on NBC's Meet the Press.

Former Federal Reserve Chairman Alan Greenspan said yesterday that he expected a quick rebound in jobs because companies are stretched to expand production after workforce cuts made during the recession.

But he warned that even as companies begin adding workers, the unemployment rate may continue to rise because the economy needs to add 100,000 jobs per month simply to keep up with population growth and because many workers who lost jobs during the recession and later gave up looking for work also are likely to return to seeking jobs.

Greenspan said on NBC's "Meet the Press" program that businesses were "very frightened" by the financial crisis and deterioration of the U.S. economy early this year and cut their payrolls so deeply that they will have to begin hiring soon.

"We have a level of employment at this stage which is barely adequate to staff the level of output," Greenspan said. "It seems to me virtually inevitable - if nothing else were to happen - that employment would start to come back fairly quickly."

-Bloomberg News

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